Hobbist & Lockeian Underlying Assumptions, & Adam Smith Thought, & BRIEFLY NOTED: for 2023-01-15 Su
Last Friday we had our semester-opening N2PE event “The Market Giveth, the Market Taketh Away: Blessed Be the Name of the Market?”—the Glory Liu "Adam Smith’s America", Jake Soll "Free Market, Brad...
Last Friday we had our semester-opening N2PE event “The Market Giveth, the Market Taketh Away: Blessed Be the Name of the Market?”—the Glory Liu Adam Smith’s America, Jake Soll Free Market, Brad DeLong Slouching Towards Utopia event. We worried at the question of the persistence of market-utopia thought. It has, after all, been 98 years since John Maynard Keynes declared “The End of Laissez-Faire”:
Let us clear from the ground the metaphysical or general principles upon which, from time to time, laissez-faire has been founded. It is not true that individuals possess a prescriptive 'natural liberty' in their economic activities. There is no 'compact' conferring perpetual rights on those who Have or on those who Acquire. The world is not so governed from above that private and social interest always coincide. It is not so managed here below that in practice they coincide. It is not a correct deduction from the principles of economics that enlightened self-interest always operates in the public interest. Nor is it true that self-interest generally is enlightened; more often individuals acting separately to promote their own ends are too ignorant or too weak to attain even these. Experience does not show that individuals, when they make up a social unit, are always less clear-sighted than when they act separately…
And yet, and yet…
There is a huge amount going on here in this brief exchange from the event.
Roughly what people said:
Konrad Posch: Next up, we have David Singh Grewel of Berkeley Law…
Glory M. Liu: Oh, I hope David talks about the French Revolution…
David Singh Grewel: I hesitate to raise this. So hopefully we can keep it short, and if it doesn't resonate, just move on.
First thank you for your books. It's great to be in dialogue. I was wondering about whether you thought that beneath the various metaphors and the linguistic terms that Jake and Glory drew attention to, there is a presumed or implied social geometry that's underlying market thinking.
I think sometimes about the difference between triadic and dyadic social geometry. Triangular social geometry would always have a third party in an implicit or explicit process of judging the two parties. What I think classical political economy does is it shifts from the triadic social geometry that's commonplace in 17th-century social-contract theory to an essentially dyadic social geometry, which then secretes a theory of exchange and exchange-value. Then you are constantly pushed into questions about the value of a transaction.
You can say that that is buffered by morality. You can say that that is buffered by law. But you have a gravitational pull back to some idea of value, which is why there's the constant peregrinations of the theory of value from this time on.
I don't know what y’all think about that, or whether it is something else. But could there be a metaphor under the metaphors, which is what is doing the work and why it's so hard to dislodge this?
Thank you.
Glory Liu: It’s a great question. Can I ask a clarification first: About the geometry. Could you just pinpoint—sorry, my monkey brain is just not working very well—what are the points on the triad and the dyad?
David Singh Grewel: Take the state-of-nature conceit that you find in Hobbes and Locke. In one of them, you've got three people, with the need for a sovereign Leviathan, a judge to sort out the fighting between person one and person two. In the other, you have two people who have got things to trade with each other. So you shift from a trilateral to a dyadic sociometry as the basis of society.
And if you make that move, then we keep offering the market. We can say what we do or don't like about it, but we are going to keep being drawn back to it. And we are going to keep assuming that there is something like exchange-value that just keeps getting secreted by humanity or society.
So the question is, how deep does this go?
Brad DeLong: Do we want to say that, while chimpanzees reinforce their social bonds by grooming each other because they can't pick parasites off of the fur on their backs by themselves, but because we are naked apes we findit easy to pick parasites off our back, and so we instead have evolved to solidify our social bonds via individual reciprocal-gift exchange—in which you do not want to be the one always taking advantage of the other by receiving gifts, but you also don't want to be the sucker who's always giving things?
Do we want to say that this underpins human sociality and sociability at a very deep level, as Paul Seabright argues in his excellent The Company of Strangers?
Do we want to say that it's more recent than that? Do we want to say that it comes out of the Indo-Europeans boiling out of the steppe with their wagons, their bows, their domesticated horses, and the reciprocal guest-host relationship ethic between males at the core of their society?
Do we want to say that these illusions keep us from understanding what our society really is, except if you are Thomas Hobbes and are able to see deeper?
These are questions that are far far above my paygrade.
Jake Soll: Let me try and take a stab at this question, David. I'm going to answer by way of not really answering.
It depends on whether you think that Smith thinks that the social geometry of society itself is composed of a bunch of dyads. Or does Smith view society itself is a proto-Durkheimian thing, and with is a unit.
Our relations in society may be dyadic. They might be multilateral, . They certainly aren't governed in a top-down relation. Maybe society is an aggregation of dyadic relationships. Maybe societal expectationa are a thing that governs those dyads and we don't need this intervening judge.
That is why the the interpretation of the invisible hand is really powerful and really important. What Smith is saying is: This is how society works. He's not saying: This is how the market works. He's saying: There is diffuse epistemic power in what we know from our local interactions that holds everything together. It's an epistemic social theory, not a theory of price.
I think that that is closer to how Smith views the underlying geometry of society than is Friedman's version of the invisible hand.
Maybe that kind of answers your question?
David Singh Grewel: That’s super helpful, and you got it. Thanks.
Perhaps what is going on here will be clearer if you replace Jake’s “epistemic” with “knowledge”...
My gloss: David is saying that Locke and Lockeians narrow the focus to two cooperative individuals, each with different possessions that are theirs by natural right, and different needs and desires that do not accord with their possessions. The only knowledge they need is thus shared between them, and that knowledge impels them to trade. And then you aggregate up all the dyads and you make all the trades and you wind up somewhere in the game-theoretic equilibrium core, at a Pareto-optimal allocation of production and consumption. You wind up with neoclassical economics. And as long as you focus on individuals with resources on the one hand and needs and desires on the other, you are going to pushed toward thinking like a neoclassical economist. You cannot really do anything else.
But, David says, Hobbes and Hobbists have a different, more realistic, view—the view of Michele Piccione and Ariel Rubinstein that you can have an exchange equilibrium in which people make mutually beneficial trades, or you can have a law-of-the-jungle equilibrium in which the strong do what they wish and the weak get whatever is left—suffer what they must. That's a third-party, judge, Leviathan, sovereign, is needed to regulate when interactions will be “exchange” and when they will be “law-of-the-jungle”, or else the whole thing collapses into anarchy and life for everyone becomes nasty, brutish, and short.
David is asking: Does our tendency to think in a Lockeian way when reality is actually Hobbist doom us to be constantly pulled in the direction of thinking like a neoclassical economist, and so give us a faulty grasp and understanding of social reality? Is it the Lockeian pursuit to explain society as reducible to an assembly of relationships in each of which two people with resources peacefully confront each other that leads to the persistence of “the market giveth, the market taketh away: blessed be the name of the market”?
Friedrich Engels would have said: of course! The shift from the feudal mode and relations of production around 1000 to the imperial-commercial gunpowder-empire mode and relations of production around 1700 convinced people in their daily life that they (if they were adult males of the right race) were (reasonably) self-sufficient individuals with resources interacting peacefully with other such, and that any overlay of “society” on their interaction—whether feudal remnant or corrupt government-mandated monopoly or whatever else—was a source of unfreedom. Engels, however, looked forward to the explosion of that mode of thought as we shifted from the imperial-commercial gunpowder-empire mode and relations of production around 1700 to steampower-society mode and relations of production around 1870—that it would be completely obvious that production was societal in a deep sense and that we were all so interdependent that none of us could claim that he had made something by himself and thus had a strong right to control it.
And yet that social learning did not happen. When Barack Obama in 2012 made that interdependency point, the right-wing ideological reaction was extraordinary in its energy and its idiocy…
I am saying: Yes, it does give us a false picture—but the roots of our cognitive misperceptions here may be very, very deep indeed,.
Jake is saying: We interact with each other as dyads, but the right way to understand Smith is that he does not think that those dyadic exchange interactions are everything. Rather, at bottom Smith thinks that our interactions give rise to our sympathies, morals, and expectations—to “society”. And society exerts pressure on all of us to behave—sympathy, benevolence, our desire to be respected in the eyes of others, our desire to be worthy of respect in our own eyes, and direct material interest all work together, as if impelled by an Invisible Hand, to keep us out of Hobbist dystopian anarchy even without all-mighty all-seeing sovereign leviathan.
Buy Glory M. Liu’s book Adam Smith’s America on the reception of Adam Smith in America!
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re: your N2PE event,
I think all societies are triadic, it's just who they choose to be the third participant in various contexts. Liberals tend to prefer government be a third party because (ideally) it has the legitimacy of majority support. Religious fundamentalists have their written word as a guide to how society should function because that's what God told them to do. The market fundamentalists have taken the position that for purely economic transactions between two individuals, the third party can simply be "the market". This is why they make claims about efficiency and equity that are not supported by the evidence. However they usually allow for the government or religion to be the third party in other contexts or in extreme cases. Market realists tend to understand that "the market" is excellent at setting prices and thereby allocating assets, but also that it is completely blind to non-economic aspects of human interaction and dangerous imbalances can result from ignoring these non-economic aspects of society (slavery, child labor, company towns, all kinds of graft and fraud, etc.)
This is because the driving force between fundamentalism is to rebel against the complexity of human society and to search for simple, easily understood rules of behavior to govern society - an algorithmic third part of the triad. Whether those rules actually work or not long term is besides the point. And of course it is humans that cause the complexity in human societies, so expecting a simple set of rules to govern human behavior is dangerously naive. It's how you get the institutional rot of an excessively legalistic society, since the basic rules don't do a very good job and human are very good at developing unusual edge cases that need to be resolved. I expect that there will be efforts to use AI mediated analysis to be the third party in the societal triad, and it will work about as well as previous attempts.
This discussion of the dichotomy between the trilateral and dyadic social structure made me wonder how one might go about bringing God into it.
The most superior Superior is of course ineffable and unseen, but His prophets and ministers are, thankfully, able to interpret and convey His wishes and intentions to those of us here below. Oddly enough, what He always seems to want, among other things, is a deeply patriarchal society in which women are limited to Kinder, Küche, Kirche and otherwise completely at the mercy of their men
You could argue that, factoring in religion, the trilateral society becomes quadrilateral, with a crucial question being who, exactly, gets to speak for the ever-silent fourth player. Differences of opinion on that point drive much of pre-Enlightenment human history on the level of high politics: Henry IV standing in the snow outside the castle doors at Canossa, Henry II vs. Becket, Henry VIII vs. Clement VII, and on and on (one wonders, why do so many Henrys get into trouble?).
In the Lockean dyadic structure, each player can determine the will of God for himself–sola scriptura!–with the curious result that, in matters of business, God almost always wants for each of them what he wants for himself. Shorn of his divine right, the King, or King in Parliament, as the case may be, becomes just another piece on the board, to be co-opted, evaded, or ignored.
Perhaps religion is only a makeweight for whichever player can, where relevant, compel the others to accept his understanding of Deus vult, in which case it isn’t really structurally important at all, but just another form of the eternal question of Who-Whom.